Syngene Int'l hits record high in a weak market, rallies 26% in two weeks

The stock rallied 6.5 per cent to Rs 596.85, surpassing its previous high Rs 594.75, touched on September 15, 2020, on the BSE.

Shares of Syngene International hit a record high of Rs 596.85, surging 6.5 per cent on the BSE in the intra-day trade on Thursday in an otherwise weak market. The stock surpassed its previous high Rs 594.75 touched on September 15, 2020.

In comparison, the S&P BSE Sensex was down 1.5 per cent at 37,115 points at 10:13 am. In the past two weeks, the stock of the pharmaceutical company has rallied 26 per cent against a 4.4 per cent fall in the benchmark index.

Since September 8, Syngene International has seen its share price surging 32 per cent after the company and HiMedia Laboratories, which have collaborated to manufacture ELISafe 19, an IgG based ELISA test kit for Covid-19, received the approval by the Indian Council of Medical Research (ICMR).

The use of an IgG antibody test offers the opportunity to study and understand the percentage of the population exposed to SARS-CoV-2 infection. The ELISafe19TM kit is intended for the qualitative detection of IgG SARS-CoV-2 antibodies using the standard ELISA method on human serum/plasma samples. The kit will also help to identify the IgG immune status of Covid-19 recovered patients so that their plasma can be used for therapeutics.

Meanwhile, the management has guided for double-digit revenue growth on the back of continuous client additions, an extension of existing contracts, increasing manufacturing and biological contributions besides currency tailwinds.

Analysts at ICICI Securities expect revenues to be back on track, going ahead, as the company is currently operating at 90 per cent capacity. Profitability is likely to be muted due to incremental opex and higher depreciation. The company remains aggressive on the capex front (nearly $463 million already spent and another nearly $87 million earmarked by FY21), attributable to order book visibility.

Asset turnover from this mega capex will be a significant determinant of improvement in return ratios, going ahead. With elite client additions like Amgen, Zoetis, Herbalife, GSK, etc, and multiple year extension of BMS and Baxter contracts, the company remains well poised to capture opportunities in the global CRO space, the brokerage firm said in the June quarter result update. The stock, however, is trading above its target price of Rs 485 per share.